The average size of executive
condominium units has become smaller over the years, say property analysts. And
the trend is likely to continue as developers struggle between maintaining
their bottom lines and keeping units affordable for buyers.

Executive condominiums (ECs) were
introduced about 20 years ago, and since then, unit sizes have been shrinking.

According to property firm SLP
International, the average size of a three-bedroom unit ranged between 1,200
and 1,300sqft when the first batch of ECs was launched in the 1990s. But it has
since gone down to less than 1,100sqft in the last five years.

Data provided by Savills Singapore
showed a similar trend. The average size of an EC unit "was about 1,200 to
1,300sqft for those launched in the era of 1990s", said Alan Cheong,
senior director of Savills Singapore's
Research and Consultancy team. "Today, we are getting about 1,050 to about
1,200. So the range has already shifted down."

Nicholas Mak, executive director of
research and consultancy at SLP International Property Consultants, said:
"The main reason is really profit motivation. In order to increase the
price per square foot and still keeping the price quantum at a fairly
affordable level for EC buyers, developers are actually reducing the size of
the EC units."

Some property analysts say the units
are likely to get smaller. Not just that, there are now two-bedroom units. The
two-bedroom units entered the market as early as 2005, according to property
analysts. And today, some measure about 700sqft each.

EC developers are not required to keep
to a minimum size for each unit, although there is a cap on the maximum number
of dwelling units allowed in a project. The number is calculated through a
formula based on the site area of the EC development.

But analysts say there is a limit to
how small units can go. "Because ECs are more for own use - for the first
five years' minimum occupation period. And then to build anything smaller,
developers will be taking risks that buyers there are not going to start an
average family with children, or even with a maid. So building more two-room
units will be pushing the limits and they are going into uncharted waters," Mr Cheong said.

Analysts say most EC buyers have
children and are currently living in an HDB flat, and they are likely to go for
units that are under $1 million. This is because the household income of EC
buyers is capped at $12,000 a month.

In addition, with the introduction of
mortgage servicing ratio rules in 2013, those who purchase EC units directly
from developers can only borrow up to 30% of their monthly income. And those
who have an HDB flat and want to buy an EC unit at future launches, will also
be required to pay a levy of up to $50,000.

Source: CNA

The wife and I would have thought that the "shrinking
EC" phenomenon over the past few years (and going forward) is a given, as such projects are built by private developers. Since we have already
seen smaller and smaller condo units being built over the years primarily for profit
reasons, why should the EC market be any different?

And contrary to professional belief, we reckon that unless the government steps in with added regulations on EC unit sizes, developers will continue to build smaller and smaller units as they have done with private condos. This is based on two premises:

1. The continual belief of most homeowners that migrating from a HDB
to an EC is a "step up" on social status - irrespective of the fact that their liveable
space is actually reduced, sometimes quite substantially.

2. The notions of DINKs (Double Income No Kid) or "small
nucleus family" - 1 kid plus a domestic helper so at most 4 people
living under one roof in total - are very deeply entrenched in those who are getting married/starting a family these days. So they might feel that a 1- or 2-bedroom unit is all they need, especially given the myriad of facilities (and not to mention prestige) that an EC provides over your typical HDB flat.

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